03 Sep 2009

No single fuel can meet our world’s growing energy needs. As populations increase and economies expand, we’ll need more energy to power our homes, businesses and industries, and to fuel our transportation needs. In 2030, global energy demand will be about 40 percent higher than it was in 2005, even assuming significant gains in efficiency. To meet this demand, while addressing the risks posed by rising greenhouse gas emissions, we’ll need to call upon a broad mix of energy sources. ExxonMobil’s The Outlook for Energy – A View to 2030, looks at the role that various fuels will play. Our findings include:

Oil, natural gas and coal will remain essential because they are the only fuels with the scale and versatility to satisfy the majority of the world’s growing needs. In 2030, these fuels will continue to provide approximately 80 percent of the world’s energy – a view shared by the International Energy Agency and the U.S. Energy Information Agency. Continuing to improve the environmental performance of these fuels will remain important.Of these, natural gas will grow the fastest because of demand in power generation for efficient fuels with relatively low carbon intensity. Nuclear power and renewable fuels will also grow. Wind, solar and biofuels will rise fastest but account for only 2 percent of global energy demand in 2030.

Our world has enormous reserves of energy. The U.S. Geological Survey estimates the amount of conventional oil that ultimately will be recovered from the Earth at more than three trillion barrels. If we add estimated frontier resources, such as heavy oil and shale oil, that volume grows to over four trillion barrels. Only about one trillion barrels of that oil has been produced so far (“Exxon Mobil, 2007”).Source: Exxon Mobil

Still, there are challenges. Untapped oil and gas resources often lie in hard-to-reach locations as is the case with New Zealand’s Continental Shelf. In order achieve success, there should be a full fledge separate department which will focus on energy needs and drive the research and investment needed to fulfill it to the best level. As New Zealand contains vast untapped oil and gas resources, therefore focus should be on areas and ways which will untap resources to the maximum possible benefit of New Zealand. Possible suggestion should be to establish “Department of Energy”. Our research will focus on setting up the regulatory structure which they should use to exploit their resources and critically assessing and constructing an appropriate department of energy.

Strategic Objective of Department of Energy

There should be a clear cut Strategic Objective of this Department duly approved by the parliament or related cabinet to set a clear goal and blood line of this department. I suggest that the following should be its Strategic Goal:

“Department of Energy should stand at the forefront of helping the New Zealand meet its energy, scientific, environmental goals. These include reducing its dependence on foreign energy sources by untapping its own resources of Oil and Gas and ensuring that New Zealand remains competitive in the global marketplace”.

Status of Department of Energy of New Zealand in the Governmental level. Department of Energy should be a cabinet level department so that it can get the desired focus and importance it needed. Subject to this, the hierarchical structure should be as follows:(Source: US Department of Energy

REGULATORY STRUCTURE

The regulatory structure can only be established once a set of coherent and complimentary objectives have been established. We assume that it is the utmost priority of the Government of New Zealand to establish a cabinet level department of energy to fulfill its desired strategic objective as stated above in Strategic Objective.

International investor requirement for effective regulation. To attract and prosper foreign investment in New Zealand, international investors require somewhat following: an independent regulatory department or agency – independence allows the confidence of private investors to be established adequate reporting and quick dispute resolution system to be put in place, and well trained and motivated staff for the agency to be hired.

Legal architecture / structure

The regulatory structure can only be established once a set of coherent and complimentary objectives have been established. We assume that it is the utmost priority of the Government of New Zealand to establish a cabinet level department of energy to fulfill its desired strategic objective as stated above in Strategic Objective [4].

International investor requirement for effective regulation. The key principle objectives of this regulation or regulatory structure should be:

To accelerate E&P activities in New Zealand with a view to achieve maximum self sufficiency in energy by increasing oil and gas production.

To promote direct foreign investment in New Zealand by increasing the competitiveness of its terms of investment in the upstream sector.

To promote the involvement of New Zealand oil and gas companies in the country’s upstream investment opportunities.

To train the New Zealand professionals in E& P sector to international standards and create favorable conditions for their retaining within the country.

To promote increased E&P activity in the onshore and offshore areas by providing globally competitive incentives.

To enable a more proactive management of resources through establishment of a strengthened Directorate General of Petroleum Concessions (DGPC) and providing the necessary control and procedures to enhance the effective management of New Zealand’s petroleum reserves.

To undertake exploitation of oil and gas resources in a socially, economically and environmentally sustainable and responsible manner.

Based upon the regulatory structure and the key principle objectives we have outlined above, an act can be passed from the Parliament outlining the detailed guidelines based upon above suggestions.

PERFORMANCE STANDARDS OF DEPARTMENT OF ENERGY

In order to achieve accountability and measurement of performance, certain performance standards can be established. This should broadly been categorized into these strategic areas:

1) Petroleum Strategy

2) Natural Gas Strategy

3) Discovery and Innovation

4) Management Excellence

Performance standards should be built around Departments Mission, Strategic Themes, Strategic Goals, Program Goals, Program Measures, Individual Performance Standards.

ENVIRONMENTAL RESPONSIBILITY

It should be the utmost responsibility of Department of Energy to develop a scope whereby companies as well as the department should cleanup hazardous materials generated from production and establishment of Petroleum and Natural Gas facilities. The cleanup scope should be a continuing process as there is a large degree of residual risk that will remain for significant period of time. The Department should take appropriate action to protect human health and the environment from these residual risks. In order to achieve this, department should apply advanced science, engineering, and cleanup technology to help ensure that it meets its national environmental cleanup strategic goals.

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